China cuts soybean import forecast in face of trade war

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BEIJING (Reuters) - China on Thursday cut its forecast for soybean imports for the 2018/19 crop year, warning that higher prices due to trade conflict with the United States would curb demand as farmers switch to alternative ingredients for their animal feed.

Imports of soybeans in the crop year that starts on Oct. 1 will be 93.85 million tonnes, down 1.8 million tonnes, or 2 percent, from last month’s estimate, the Ministry of Agriculture and Rural Affairs said in its monthly crop report.

That compares with its estimate of 95.97 million for the 2017/18 crop year and, according to U.S. government records, would be the lowest import level since 2016/17.

China on July 6 imposed 25 percent tariffs on $34 billion in U.S. goods, including soybeans, in response to U.S. duties imposed the same day on Chinese products worth a similar value, as the world’s top two economies headed into an outright trade war.

The ministry’s Chinese Agricultural Supply and Demand Estimates (CASDE) report said the new tariffs on U.S. shipments introduced would inflate prices of the oilseed.

That means that crushers, who make meal and oil from the beans, will turn to other sources of protein, the ministry said. That could be good news for producers of rapeseed, peanuts or sunflower seeds.

It also comes as demand for soymeal has already been hit by losses in the pig farming sector, the report said.

Meanwhile, the government cut its soybean consumption forecast by 2 percent from the previous month’s outlook to 109.23 million tonnes. That would still be 1 percent higher than consumption in the 2017/18 crop year.

The extra tariffs are expected to push up China’s soybean import costs by 100 yuan ($14.95) per tonne from the previous month’s forecast, the CASDE report said.

The forecast for China’s 2017/18 cotton imports was raised by 200,000 tonnes from the previous month to 1.3 million tonnes.

The outlook for rapeseed output during the 2017/18 crop year was increased from the previous month as major producers promoted different uses of the oilseed, though no figure was provided, the ministry said.